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Dialog Semiconductor Expects To Remain Apple's Main Supplier Of PMIC Designs

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Dialog Semiconductor (DLG) PT Set at €58.00 by Commerzbank

The company's share price has been under pressure since reports emerged that Apple is working on its own power management chip, which could lead to less business for its usual supplier Dialog.

Dialog, which supplies chips for iPhones, iPads and watches, conceded in a statement Monday that Apple could be about to move its chip design in-house.

Dialog Semiconductor said on December 4 that top customer Apple could build its own power-management chips for its iPhone handsets rather than rely on the Anglo-German chipmaker. Oddo Bhf set a €50.00 ($59.52) target price on Dialog Semiconductor and gave the company a buy rating in a research report on Friday, October 6th.

At the came time, the company says it understands that its continued role as Apple's main PMIC supplier is contingent on meeting Apple's technology, quality, price and volume expectations, as well as continuing to develop advanced technology to meet Apple's requirements. However, Dialog does not expect this to impact its business in 2018.

Investors are wary of companies that rely heavily on Apple, which has cut out several small suppliers in the past.

Imagination has since been sold to China-backed Canyon Bridge Capital Partners for -550 million ($740 million), well below the -2 billion ($2.7 billion) it was worth at its peak in 2012.

Dialog Semiconductor is finding out what happens when you put most of your eggs (or apples, perhaps) in one basket.

In mid-morning European trade, shares in the Anglo-German firm were more than 18 percent lower.

"The shares appear to have instantly priced that Apple will design out Dialog partly or almost completely", Morgan Stanley said in a note to investors. But that may change in the future if Apple decides to drop it in favor of its own power management chips. Dialog stock has lost more than 40% of its value since April when an analyst warned that Apple was working on its own battery-saving chip.

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